8 tricks to help you price your SaaS products

One of the biggest puzzles companies face is pricing SaaS products. How do you charge for something that customers essentially use but do not own? And in what way does approaching pricing differ from more traditional products and services. Our blog on “How to master the art of SaaS product pricing” covers the following tricks in complete detail. 

1. Understand the 8 pricing models before you get started  

Check out the guides below if you’d like to familiarize yourself with the different pricing models. Each one includes detailed information about the pros and cons of each strategy and examples of them in action. 

• Usage-based
• Per-user
• Flat-rate
• Bundled
• Feature-based
• Tiered
• Hybrid
• Freemium

2. Perceived customer value and buyer personas should guide the pricing conversation  

Often pricing is set based on a competitive analysis of a market, yet the most critical data you can obtain for SaaS products is perceived customer value. Build buyer personas to make this data come to life and help you steer the conversation towards the perceptions and needs of your target audience. 

3. Use these metrics: Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC)  

Even rough estimates will help you decide when it comes to determining the right price for your SaaS products. Because users tend to pay less for access to your products upfront, it’s essential to use the projected lifetime value to determine how much you can spend on customer acquisition. It’s also wise to watch these numbers as they tend to change as your product evolves and you have access to subscriber churn metrics.   

4. Restructuring sales incentives and retraining  

 This is particularly important for teams moving from traditional sales structuring around product sales to recurring revenue. Sales need to be part of the conversation and may require retraining to handle the transition.  

 5. SaaS pricing psychology methods may give you the edge 

You can use a wide range of tactics to increase conversations on your pricing page. We detail many of today’s most successful strategies in the following two blogs. 

• 4 secrets to better subscription pricing psychology 
• 7 principles of pricing psychology  

6. Make sure to include customer service and training in your pricing  

How much value does your customer place on customer service and training? If not, find out and make sure you convey this part of your offering as another product feature. It may be what sets you apart from the conversation, and good customer support can be expensive, so it’s wise to include this factor in SaaS pricing conversations.  

 7. Consider the long-term impact of discounting

Popular discounting strategies include pricing methods such as freemium billing models. These can seem like an excellent way to gain market dominance, but you must be sure you can guarantee good service that won’t result in high churn rates. These strategies work best for products that don’t need much support and are highly intuitive. Otherwise, you may find customers frustrated and jumping ship once the trial is over. 

 8. Take a hybrid approach to setting your price 

 There are no hard and fast laws when pricing your SaaS products, be sure to consider all options and keep an open mind. Don’t be afraid to tailor your pricing to fit your offering rather than what the market is doing. Maybe you’ll find inspiration in strategies used by companies outside of your industry or by billing models your competitors don’t use. 

Our blog on “How to master the art of SaaS product pricing” covers the following tricks in complete detail. 

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